KLM has ensured that the new CLA takes account of price developments in the Netherlands. A wage clause specifying a 2% increase effective 1 October 2022 and further 2% effective 1 March 2023 has been agreed. This reflects agreements recently reached with the trade unions representing ground personnel.

We also reached an agreement with VNV on productivity and flexibility in the coming period.

The existing international commuting arrangement for pilots has been discontinued. Pilots who live outside the Netherlands will now pay for their flights when commuting to work.

KLM employees will receive one-off payment when KLM no longer has a credit facility with government guarantees. This payment acknowledges the concerted effort made by KLM staff in the face of recent challenges.

Despite KLM’s successful recovery, the future remains uncertain due to factors such as high inflation, rising costs, uncertainties surrounding coronavirus and scarcity in the job market. KLM must therefore continue to cut costs structurally. The negotiating parties agreed to return to the table if the situation so demands in the coming period.

The Dutch Government has made its loan package contingent on certain conditions, one being that all KLM employees must agree to surrender certain employment conditions for the duration of the loan (expected until 2025). KLM has spent the past few months hammering out the details of this austerity programme with the trade unions for cockpit, ground and cabin personnel, in line with the required structure and percentages.

The outcomes of these negotiations have been formalised in outline collective labour agreements and incorporated as such into the restructuring plan that KLM submitted to the Dutch Government on 1 October. The outline agreements define the austerity measures that will apply until early 2022 (for cockpit crews) and late 2022 (for ground and cabin personnel). It was especially important to specify the contribution that all KLM employees would be making towards the airline’s cost-reduction efforts over the entire loan period.

To meet this demand without having to re-enter negotiations, a “commitment clause” was inserted into the agreements between KLM and the trade unions. Unions CNV, De Unie, NVLT, VNC and VKP signed the clause on 31 October, with FNV Luchtvaart and FNV Cabine doing so on 2 November.

Today, 3 November, the Dutch Airline Pilots Association VNV also signed the commitment clause. KLM and the eight trade unions have therefore satisfied a key requirement, clearing the way for the Minister of Finance to assess whether the airline now meets the Dutch government’s demands.

KLM is delighted that it has reached an agreement with the VNV and hopes that a line can now be drawn under a difficult period. KLM wishes now to join with the VNV to concentrate on the challenges ahead.

Consequently, KLM has decided to rescind its decision to withdraw from the STROT protocol and the implementation agreement. This ensures that all parties are clear on the current pension scheme. KLM has suspended plans to establish a new pension fund, and KLM and VNV have agreed to halt legal proceedings against each other.

VNV and KLM also agreed that, should there be a “dowry” attached to the agreement on a new pension scheme, the possible additional payment in 2016 will be part of that dowry.

The establishment of a new pension fund was prompted by suspension of the so-called STROT (structural surpluses and shortages) protocol in the existing pension fund. KLM saw no other option than to suspend its STROT protocol with the VNV Pilots’ Union, as well as its implementation agreement with the pension fund. The reason being that new pension legislation has an unintended side-effect which, in combination with low interest rates, confronted KLM with the prospect of having to make a disproportionately large supplementary payment to meet indexation requirements, thereby jeopardising future employment opportunities within the company.

Because KLM previously suspended this implementation agreement with the existing pension fund, a new pension fund had to be established in accordance with future obligations. The VNV Pilots’ Union refused to give consent for the establishment of this new pension fund. The fall-back option, as laid down in law, is that the Works Council is then asked to give consent. Because the Works Council was unable to issue consent within an acceptable timeframe, KLM had no other option than to approach the court for consent. This alternative consent was in the interest of the pilots, ensuring that they will continue to accrue pension after 1 December, even if KLM and VNV are unable to reach an agreement.

In view of the court’s ruling, KLM has decided, free of legal obligation, that it will continue paying into the existing pension fund after 30 November, thereby ensuring continued accrual of pension and insurance of risks in the existing fund. However, this does not imply that KLM withdraws is suspension of the implementation agreement. KLM will continue to pay premiums in this manner for the time being, at least until there is greater clarity. In the coming days, KLM will scrutinise the current situation and carefully consider what subsequent steps are most suitable.

Cancelling the STROT protocol with the VNV and the financing agreement with the Pension Fund was an extreme measure for KLM. The unintended consequences brought about by changes to the legislation, combined with low interest rates, would force KLM to make disproportionately high supplementary payments, that would impact the company’s financial situation and endanger jobs in the future.

KLM is confident it will be able to arrive at a suitable solution with the VNV.

The STROT protocol and the implementation agreement stipulate that KLM should make a supplementary payment if the cover ratio of the pension fund is insufficient for full indexation. The limit for this cover ratio had been set at 105%.

New legislation, which took effect on 1 January 2015, raised this limit to around 122%. Below this cover ratio, full indexation is impossible, which means KLM must make a supplementary payment if the cover ratio is below 122%. In view of the current financial status of the pension fund, this supplementary payment, which is due in late 2016, could amount to hundreds of millions of euros.

This pension issue is an unexpected side-effect of the new legislation passed on 1 January 2015. Since then, KLM and VNV have met on several occasions to discuss this new legislation and its unintended side-effects. These meetings did not result in a solution.

It is not KLM’s intention to reduce pension costs. The point is that the unintended effects of the amended legislation, in combination with low interest rates, have confronted KLM with a disproportionately high supplementation commitment, which jeopardises operational continuity.

KLM therefore cannot pursue the current supplementation scheme for future indexation of the pilots’ pension scheme in its current form. As a result, KLM is compelled to suspend its STROT protocol with the VNV pilots’ union as well as its implementation agreement with the pension funds effective 1 December 2016. The proposed adjustments imply that indexation security will change. All other pension commitments will remain unchanged.

Together with this suspension, KLM presented the VNV with an alternative proposal for the STROT protocol and the implementation agreement. 

Although KLM cannot comply with the VNV’s ultimatum to withdraw its proposal from the negotiating table, it today assured the VNV that it has every intention to keep seeing an equitable solution. This is borne out the four alternatives that KLM offered to the VNV in its latest letter of proposal.

KLM finds it highly regrettable that VNV seems to be opting to take legal rather than engaging in dialogue to resolve this issue.